Motion for retrial in flipping fraud case is dismissed

For a moment it looked like the three defendants convicted in last year's flipping fraud case centered on Southwest Florida might get a retrial based on alleged jury misconduct.

But U.S. District Court Judge Elizabeth Kovachevich quashed any chance of that happening this week when she handed down a withering critique of the defendants' attempt to get “a second bite at the apple.”

“The court is particularly troubled by the ‘win at all costs' professional attitude displayed in this case, especially when the costs are levied on a federal court system bereft of adequate resources,” Kovachevich wrote in her April 22 ruling. “This was a costly exercise set into motion by news stories, a defendant looking for a second bite at the apple and an out-of-state lawyer that is willing to win at all costs. In the end, the motion is without merit and due to be denied.”

The ruling means that George Cavallo, Paula Hornberger and Joel Streinz — all convicted of conspiring to defraud banks in a decade-long scheme orchestrated by flipping fraud mastermind R. Craig Adams and his chief lieutenant, Rich Bobka — will have to serve out their prison sentences unless they are able to overturn the verdicts on appeal.

Cavallo was sentenced to 10 years and is expected to turn himself in to the federal Bureau of Prisons in June.

Streinz, who got five years, is already in a federal prison in Yazoo City, Miss., while Hornberger, who is married to Cavallo, is serving her year-and-a-day sentence at Seattle's Sea Tac federal penitentiary.

Another chance?

In late February, it had looked like the three defendants might get another chance.

That was when Cavallo contacted one of the jurors in the case — Patrick “P.J.” George — and discovered that the convictions might have resulted from juror misconduct.

In an email sent to Cavallo's trial lawyer, Karen Unger, George explained that he and an unnamed female juror believed the three defendants were innocent. But their 10 fellow jurors had all voted to convict.

After they told Kovachevich that they had a hung jury, the judge ordered the jury back to deliberate further.

George said in his email that he managed to convince the 10 jurors to reduce their guilty verdicts to just two charges against Hornberger and Cavallo and one against Streinz. But the unnamed female juror still wanted to acquit.

In a conversation outside the jury room, George said he asked her why she did not want to change her verdict. The female juror said she knew things about the case that she could not discuss. That led George to surmise that she had investigated the case through searches on the Internet, which she and the other jurors repeatedly had sworn not to do.

George then told other jurors he would turn her in unless she changed her mind.

“I guess they convinced her I was serious,” George wrote in his email. “She then voted to convict along with the rest.”

When Unger, Cavallo's trial attorney, received the email from George, the lawyer immediately forwarded it to Cavallo's appeal attorney and to prosecutors who had tried the case on behalf of the government.

The result was a motion that called for a retrial based on jury misconduct.

Judge Kovachevich responded by setting up a March 28 evidentiary hearing in which she took testimony from George.

At that hearing, Kovachevich learned that George received a phone call “out of the blue” from Cavallo in February and that Cavallo “made a series of statements clearly intended to invoke sympathy (and perhaps some other action) from Juror George based on the consequences of the conviction and the subsequent sentencing.”

George testified that Cavallo told him that Hornberger was already in prison and that government prosecutors were trying to take away her Seattle apartment despite the judge telling them not to.

At Cavallo's request, George called Unger later that same day, and the lawyer asked him to send her an email because she was not permitted to speak to jurors under court rules.

“Just because a defendant in a case is asking you to do something, do you have to do it?” Judge Kovachevich asked George during the evidentiary hearing.

“I realize now I shouldn't have,” he replied.

George then exercised his Fifth Amendment right not to incriminate himself and refused to comment further on the content of his email.

The only other statements he made, according to Kovachevich's ruling, were to deny he had attempted to view any extraneous information about the case during deliberations and to testify that he did not personally observe any other juror viewing such information.

George also reaffirmed the verdict he entered against the three defendants in May 2012.

Little evidence

Judge Kovachevich pointed out in her ruling that the only evidence of juror misconduct in the case was the email from George.

But she said she would not consider the contents of that email because it resulted from “what seems to be a concerted effort by two or more people to thwart the court's specific instructions regarding juror contact.”

Kovachevich also referred to a 15-page affidavit sent by Cavallo along with his motion for a retrial.

“Facing a ten year sentence at a federal penitentiary, Mr. Cavallo has every reason to distort the truth,” the judge wrote. “The court does not buy what Mr. Cavallo is selling and will, therefore, discount any fact in Mr. Cavallo's affidavit that contradicts Juror George's testimony.”